Contract farming: An opportunity for supermarkets in China

Abstract

This study aims to investigate how large supermarkets in China can be benefited from directly contracting with small farmers and then maintain their competitiveness. Structural equation model is used to analyze results of online questionnaire involving 257 respondents. This paper finds that less risk perceived either in retailer reliability or in food safety can increase customers purchasing confidence. Consumption in supermarkets can be significantly facilitated by universalism impacts but less by selling regional produce. These results suggest large supermarkets in China to contract directly with small farmers to help in selling their produces and production inputs supports to achieve a win-win situation.